Raj Kumar Gunwant, Keonjhar V. ACIT, Sambalpur

ITA 314/CTK/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7212 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 24-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P R MOHANTY
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.314/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 RAJ KUMAR GUNWANT, C/O. BARBIL STEEL FABRICATION WORKS, PHD ROAD, PO: BARBIL, KEONJHAR. VS. ACIT,CIRCLE - 1(1), SAMBALPUR PAN/GIR NO. ABVPG 6681 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANTY, AR REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 24 /01/ 2017 DATE OF PRONOUNCEMENT : 24 /01/ 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 29.1.2015 , FOR THE ASSESSMENT YEAR 2010 - 11 . 2. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY 61 DAYS. THE ASSESSEE HAS FILED CONDONATION PETITION DATED 24.6.2015 FOR COND ONING THE DELAY IN FILING THE APPEAL. AFTER GOING THROUGH THE CONDONATION PETITION, I FIND THAT THE ASSESSEE HAD REASONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN THE STIPULATED TIME. LD D.R. DID NOT HAVE ANY 2 ITA NO.314/CTK/2015 ASSESSMENT YEAR :2010 - 2011 OBJECTION FOR CONDONING THE DELAY. I, THERE FORE, CONDONE THE DELAY OF 61 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL AND ADMIT THE APPEAL FOR HEARING. 3 . GROUND NO.1 OF THE APPEAL IS GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION BY ME. 4 . IN GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF LOAN OF RS.7,00,000/ - TAKEN FROM MAGATURAM AGARWAL (HUF). 5 . IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) E RRED IN SUSTAINING THE ADDITION OF LOAN OF RS.17,00,000 TAKEN FROM M/S. M.D.TRADING COMPANY PVT LTD. 6 . I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS RECEIVED UNSECURED LOAN OF RS.7,00,000/ - FROM SHRI MANGUTRAM AGARWAL (HUF) . THE ASSESSING OFFICER CALLED FOR INFORMATION U/ S.133(6) OF THE ACT OF THE CREDITOR AND NO REPLY WAS RECEIVED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER THEN CONDUCTED ENQUIRY THROUGH THE INSPECTOR OF INCOME TAX, WHO SUBMITTED THAT SHRI MANGAT U RAM AGARWAL EXPIRED IN 2004 AND HIS SON SANJAYA AGA RWAL STATED THAT SOME LOAN WAS ADVANCED TO THE ASSESSEE FROM THEIR HUF FILE. NO INFORMATION AND OTHER DETAILS LIKE THE SUCCESSION CERTIFICATE OR BANK'S ORDER SHOWING THAT THE HUF EXISTED 3 ITA NO.314/CTK/2015 ASSESSMENT YEAR :2010 - 2011 AFTER THE DEATH OF KARTA HAS BEEN PRODUCED. THEREFORE, THE ASSESSING OFFICER ADDED RS.7 LAKHS U/S.68 OF THE ACT. 7 . BEFORE THE CIT(A) THE ASSESSEE ARGUED THAT THE LOAN OF RS.7 LAKHS HAS BEEN R ECEIVED THROUGH ACC OUNT PAYEE CHEQUE. THE ASSESSEE ALSO SUBMITTED THE STATEMENT OF AFFAIRS OF MANGUTRAM AGARWAL (HUF) FOR YEARS AFTER THE YEAR OF ADVANCE. THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE OBSERVED THAT THE FA CT THAT THE AMOUNTS HAV E BEEN RECEIVED BY THE ASSESSEE THROUGH BANKING CHANNEL IMPLIES THROU GH CHEQUE OR DRAFT DOES NOT SHOW THAT THE SOURCE OF THE LOAN WAS EXPLAINE D. HE OBSERVED THAT THE ASSESS EE HAS GIVEN WRONG ADDRESS TO THE ASSESSING OFFICER REGARDING THE LOAN CREDITOR WHICH IS HIGHLY IMPROBABLE. TO PRODUCE THE CONFIRMATION ETC, AT THIS STAGE, DOES NOT SERVE THE PURPOSE OF EVIDENCE AND, THEREFORE, HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS CIT, 214 ITR 801 (SC) AND CIT VS. D.P.MORE, 82 ITR 540 (SC), WHEREIN, THE HON BLE SUPREME COURT DECIDED THAT THE MAXIM, THE APPARENT IS REAL IS NOT ALWAYS SACROSANCT. 8 . SIMILARLY, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS TAKEN LOAN OF RS.17,00,000/ - FROM M/S. M.D.TRADING COMPANY PVT LTD. . THE ASSESSING OFFICER CALLED FOR INFORMATION U/ S.133(6) OF THE ACT, WHERE LETTER TO M/S. M.D.TRADING COMPANY PVT LTD., RETURNED UNSERVED BY THE POSTAL AUTHORITIES. THE ASSESSING OFFICER THEN FOUND FROM THE PAN DATA BASE THAT THE COMPANY 4 ITA NO.314/CTK/2015 ASSESSMENT YEAR :2010 - 2011 IS BASED IN KOLKATA W HOSE COMPLETE POSTAL ADDRESS IS 14/5, CLIVE ROW, KOLKATA, WHERE AS AS PER THE CONFIRMATION, SUBMITTED BY THE ASSESSEE THE ADDRESSEE IS NO.6, BRAVRONG ROAD, ROOM NO.402A, 4 TH FLOOR, VAISHNA CHAMBER, KOLKATA - 1. THEREFORE, HE TREATED THE LOAN OF RS.17,00,000/ - AS UNEXPLAINED AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S.68 OF THE ACT. 9 . BEFORE THE CIT(A), THE ASSESSEE SUBMITTED CONFIRMATION FROM M/S. M.D.TRADING CO. PVT LTD., ALONGWITH BALANCE SHEET, ETC. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING THAT THE FA CT THAT THE AMOUNTS HAV E BEEN RECEIVED BY THE ASSESSEE THROUGH BANKING CHANNEL DOES NOT EXPLAIN THAT THE SOURCE OF THE LOAN . HE OBSERVED THAT THE ASSESS EE HAS GIVEN WRONG ADDRESS TO THE ASSESSING OFFICER REGARDING THE LOAN CREDITOR WHICH IS HIGHLY IMPROBABLE. T O PRODUCE THE CONFIRMATION ETC, AT THIS STAGE, DOES NOT SERVE THE PURPOSE OF EVIDENCE AND, THEREFORE, HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS CIT, 214 ITR 801 (SC) A ND CIT VS. D.P.MORE, 82 ITR 540 (SC), WHEREIN, THE HON BLE SUPREME COURT DECIDED THAT THE MAXIM, THE APPARENT IS REAL IS NOT ALWAYS SACROSANCT. 10 . BEFORE ME, LD A.R. OF THE ASSESSEE REFERRED TO PAGES 1 & 2 OF THE PAPER BOOK FILED BEFORE THE TRIBUNAL AND SUBMITTED THAT THE LOAN OF RS.7,00,000/ - WAS RECEIVED ON 18.3.2010 BY CHEQUE NO.522529. HE THEN REFERRED TO PAGES 3,4, & 5 OF THE PAPER BOOK AND SUBMITTED THAT THE LOAN CONFIRMATION FOR THE 5 ITA NO.314/CTK/2015 ASSESSMENT YEAR :2010 - 2011 ASSESSMENT YEAR 2014 - 15, 2013 - 14 AND 2012 - 13 ARE FILED CONFIRMING THE LOAN ADVANCED TO THE ASSESSEE BY SHRI MANGAT U RAM AGARWAL (HUF) ON WHICH INTEREST HAS BEEN PAID BY THE ASSESSEE YEAR AFTER YEAR AND THAT THE SAID LOAN WAS FINALLY SQUARED UP ON 4.10.2013 BY MAKING PAYMENT THROUGH CHEQUE. HE SUBMITTED THAT AT PAGE 6 OF THE PAPER BOOK, THE COMPUTATION OF INCOME FOR A.Y. 2013 - 14 IS FILED, WHEREIN, INTEREST INCOME OF RS.1,03,124/ - HAS BEEN SHOWN BY MANGAT U RAM AGARWAL (HUF) AS ITS INCOME. FURTHER FROM PAGE 7 OF PAPER BOOK, HE SUBMITTED THAT THE LOAN GIVEN TO THE ASSESSEE W AS SHOWN IN BALANCE SHEET AS ON 31.3.2013. HE SUBMITTED THAT AT PAGE 8 OF THE B OOK , COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2012 - 13 OF MANGAT U RAM AGARWAL (HUF) IS FILED, WHEREIN, INTEREST INCOME OF RS.93,070/ - HAS BEEN SHOWN BY THE SAID MANGAT U RAM AGA RWAL (HUF). FURTHER, PAGE 9 OF THE PAPER BOOK IS THE BALANCE SHEET OF MANGAT U RAM AGARWAL (HUF) AS AT 31.3.12, WHEREIN, THE LOAN GIVEN TO THE ASSESSEE IS SHOWN. SIMILARLY, HE SUBMITTED THAT AT PAGE 10 OF PAPER BOOK, COMPUTATION OF INCOME FOR A.Y. 2011 - 12 OF MANGAT U RAM AGARWAL (HUF) IS FILED, WHEREIN, INTEREST INCOME OF RS.84,000/ - EARNED FROM THE LOAN ADVANCED TO THE AS SESSEE IS SHOWN. HE POINTED OUT FROM PAGE 11 OF PB, WHEREIN, BALANCE SHEET AS ON 31.3.2011 OF MANGATURAM AGRAWAL( HUF) IS FILED THAT LOAN GIVEN TO THE ASSESSEE IS SHOWN THEREIN. HE SUBMITTED THAT ALL THESE EVIDENCES SHOW THAT THE LOAN WAS GIVEN TO THE ASSESSEE, WHICH WAS DISCLOSED BY THE SAID MANGATURAM AGRAWAL (HUF) IN ITS BALANCE SHEET AND ALSO THE INTEREST INCOME EARNED FROM ADVANCING THE SAID LOAN WAS ALSO SHOWN AS 6 ITA NO.314/CTK/2015 ASSESSMENT YEAR :2010 - 2011 INCOME AND THE DUE TAX WAS PAID BY THE SAID HUF. IN VIEW OF THESE OVERWHELMING EVIDENCES, THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN TREATING THE LOAN AS NOT GENUINE AND MAKING AN ADDITION U/S.68 OF THE ACT. 11 . SIMILARLY, FROM PAGE 12 OF PB, WHICH IS THE BANK STATEMENT OF M.D.TRADING COMPANY PVT LTD., OF HDFC BANK, HE POINTED OUT THAT THE LOAN OF RS.17,00,000/ - WAS RECEIVED ON 18.3.2010 BY CHEQUE FROM M.D.TRADING COMPANY PVT LTD BY THE ASSESSEE . FROM PAGE 13 OF PB, HE POINTED OUT THAT THE CONFIRMATION OF LOAN GIVEN TO THE ASSESSEE AS ON 31.3.2012 IS PLACED AND AT PAGE 14 OF PB, THE CONFIRMATION OF LOAN FROM M/S. M.D.TRADING COMPANY PVT LTD., FOR LOAN OUTSTANDING AS ON 31.3.2013 IS PLACED. FURTHER AT PAGE 15 OF P B, THE LOAN CONFIRMATION FROM M.D.TRADING COMPANY PVT LTD., FOR LOAN OUTSTANDING AS ON 31.3.2014 IS PLACED. THESE LOAN CONFIRMATIONS SHOW THAT THE AMOUNT OF LOAN ADVANCED TO THE ASSESSEE AS WELL AS INTEREST EARNED ON LOAN GIVEN TO THE ASSESSEE AND THE FA CT OF DEDUCTION OF TDS FROM INTEREST BY M.D.TRADING COMPANY PVT LTD. HE SUBMITTED THAT AT PAGE 16 OF PB IS THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2012 - 13 BY THE SAID M.D.TRADING COMPANY PVT. LTD., WHICH SHOWS THAT THE LOAN CREDITOR HAS SHOWN INTER EST INCOME EARNED FROM THE ASSESSEE. AT PAGE 28 OF PB, COPY OF THE BALANCE SHEET OF M.D.TRADING COMPANY PVT LTD., AS ON 31.3.2012 AND 31.3.2011 IS PLACED, WHEREIN, THE LOAN GIVEN TO THE ASSESSEE OF RS.17,00,000/ - IS SHOWN AS OUTSTANDING. HE POINTED OUT F ROM PAGE 29 OF PB, WHICH IS THE 7 ITA NO.314/CTK/2015 ASSESSMENT YEAR :2010 - 2011 ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2013 - 1 4 OF M.D.TRADING COMPANY PVT LTD, WHEREIN, INTEREST EARNED FROM THE ASSESSEE WAS SHOWN AND THE TDS DEDUCTED WAS ALSO SHOWN. FROM PAGE 42 OF PB, WHICH IS THE BALANCE SHEET O F M.D.TRADING COMPANY PVT LTD., THE LD A.R. POINTED OUT THAT THE LOAN GIVEN TO THE ASSESSEE OF RS.17 LAKHS IS SHOWN AS OUTSTANDING AS ON 31.3.2012 AND 31.3.2013. HENCE, HE POINTED OUT THAT IN THE FACE OF SUCH OVERWHELMING EVIDENCES, THE LO WER AUTHORITIES ARE NOT JUSTIFIED IN TRADING THE LOAN OF RS.17 LAKHS AS UNEXPLAINED AND MAKING ADDITION IN THE HANDS OF THE ASSESSEE U/S.68 OF THE ACT. 12 . HE FURTHER SUBMITTED THAT IT WILL BE OBSERVED FROM THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL (SUPRA), THAT THE HONBLE SUPREME COURT HAS HELD THAT APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL AND THAT THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CI RCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. IN THE INSTANT CASE, THE EVIDENCES FILED BEFORE THE DEPARTMENT DOES NOT CREATE AN IOTA OF DOUBT THAT THE LOAN TAKEN FROM 2 PERSONS IS NOT GENUINE. ONLY FOR THE REASON THAT IN ONE CASE THE NOTICE U/S.133(6) WAS RETURNED UNSERVED AND IN ANOTHER CASE THE LOAN CREDITOR DID NOT SEND HIS REPLY U/S.133(6) NOTICE, IT HAS BEEN PRESUMED THAT THE LOANS ARE NOT GENU INE. IT WAS ALSO SUBMITTED THAT THE ADDRESS OF THE LOAN CREDITORS WHERE NOTICE U/S.133(6) WAS SENT WAS OBTAINED BY THE DEPARTMENT FROM ITS 8 ITA NO.314/CTK/2015 ASSESSMENT YEAR :2010 - 2011 SITE OF PAN AND WAS NOT SUPPLIED BY THE ASSESSEE AS A LLEGED BY THE CIT(A). HENCE THE DECISION IN THE CASE OF SUMATI DAYAL (SUPRA) IS NOT APPLICABLE IN TH E CASE OF THE ASSESSEE. 13 . LD A.R. OF THE ASSESSEE ARGUED THAT IN THE CASE OF THE ASSESSEE, THE FACTS ARE QUITE DIFFERENT AND THE LOANS TAKEN BY THE ASSESSEE ARE PROVED BY FILING PAN NO. OF THE LOAN CREDITORS, RETURN OF INCOME OF LOAN CREDITORS, CONFIRMATION CERTIFICATE OF THE LOAN CREDITORS, COPY OF BALANCE SHEET OF CREDITORS, TDS DEDUCTED FROM THE INTEREST PAYMENT FROM THE LOAN, WHICH FACTS HAVE NOT BEEN PRO VED BY THE LOWER AUTHORITIES AS NOT GENUINE AND BOGUS. THEREFORE, THE LOANS SHOWN BY THE ASSESSEE ARE JUSTIFIED AND ADDITION SHOULD BE DELETED. 14 . ON THE OTHER HAND, LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 15 . I FIND THAT RS.7,00,000/ - AND R S.17,00,000/ - OBTAINED FROM TWO LOAN CREDITORS HAVE BEEN EVIDENCED BY THE ASSESSEE BY FILING PAN NO. OF THE LOAN CREDITORS, RETURN OF INCOME OF LOAN CREDITORS, CONFIRMATION CERTIFICATE OF THE LOAN CREDITORS, TDS DEDUCTED FROM THE INTEREST PAYMENT FROM THE LOAN AMOUNT. THE LOAN AMOUNT HAS BEEN RECEIVED THROUGH BANKING CHANNEL. THEREFORE, SIMPLY BECAUSE THE NOTICE SENT TO THE LOAN CREDITORS WERE RETURNED BACK BY THE POSTAL AUTHORITIES UNSERVED OR LOAN CREDITORS FAILED TO REPLY TO THE NOTICE 9 ITA NO.314/CTK/2015 ASSESSMENT YEAR :2010 - 2011 OF THE ASSESSING OFFICER, IT CANNOT BE HELD THAT LOANS TAKEN BY THE ASSESSEE ARE NOT GENUINE. FURTHER, IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT THE ADDRESS OF THE LOAN CREDITORS WAS OBTAINED BY THE ASSESSING OFFICER FROM THE PAN DATA OF THE DEPARTMENT. THE ASSESSI NG OFFICER AFTER MAKING ENQUIRY, HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE LOANS TAKEN BY THE ASSESSEE ARE NOT GENUINE OR BOGUS. HENCE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.7,00,000/ - AND RS.17,00,000/ - AGGREG ATING TO RS.24,00,000/ - MADE U/S.68 OF THE ACT. 1 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 24 / 01/2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 24 /01 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : RAJ KUMAR GUNWANT, C/O. BARBIL STEEL FABRICATION WORKS, PHD ROAD, PO: BARBIL, KEONJHAR 2. THE RESPONDENT: ACIT,CIRCLE - 1(1), SAMBALPUR 3. THE CIT(A) CUTTACK 4. CIT, SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//